Valuation: Comps & Precedents
A comp has a large unfunded pension deficit. How does it affect the EV/EBITDA you calculate, and what consistency trap should you avoid?
Model answer
Treat the unfunded pension deficit as a debt-like claim: add it to enterprise value alongside net debt (many practitioners tax-effect it, since funding contributions are typically tax-deductible - a…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from Valuation: Comps & Precedents
- What are the main valuation methodologies?
- Why might trading comps and precedent transaction comps give different values?
- Why is EV/EBITDA often preferred over P/E for comparing companies?
- What are the three primary valuation methodologies a banker uses, and in one line each, what is each based on?
- Which of the standard valuation methodologies tend to produce the HIGHEST and the LOWEST values, and why?
- Walk me through how you perform a comparable companies analysis.